A lame question about past phenomena - Auto Bailout

3 posts / 0 new
Last post
cipher's picture
cipher
Status: Bronze Member (Offline)
Joined: Jun 19 2009
Posts: 51
A lame question about past phenomena - Auto Bailout

HI all,

I had this specific question in my mind "how much of the failure of the American Auto companies could be attributed to the fact that Chinese have an advantage of cheap labor force on their side"?

I understand that American auto companies have made some bad decisions, have not improved technology and effeciency wise, did not take precautions and did not improve themselves when they could.

But could a part of their failure be attributed to the fact that you could get people to work for all seven days a week in China for a very very very low wage?

I would appreciate some insight on this.

Regards

mayankpj

RJD1892's picture
RJD1892
Status: Member (Offline)
Joined: Sep 27 2008
Posts: 7
Re: A lame question about past phenomena - Auto Bailout

Well, I think of it this way, What  % of the total cost of a car is workers wages? I don’t know, but I’m wiling to bet its lower than the profit margin. Which means it would still be profitable to build cars in America at current prices.

I BELIEVE that industry has been outsourced due to maximise profit for the coorperation. This has aggravated the wealth imbalance in our countries. This never would have happened if the owners (shareholders) of the company were also its workforce. I am thinking about the idea of non-transferable shraes.

If it would have been cheaper for the elite to export our manufacturing industry to India in the 19th century (British elite) I’m sure they would have. Remember we shipped lots of meat from New Zealand and Argentina in the 19th century.

I BELIEVE that they didn’t due to my belief that its not wages that are the problem, they are too low not too high. I believe that it’s the over excessive regulation combined with things like planned obsolescence, cut quality for a profit boost sort of ethos. No safety laws, or lawsuits, in China.

cipher's picture
cipher
Status: Bronze Member (Offline)
Joined: Jun 19 2009
Posts: 51
Re: A lame question about past phenomena - Auto Bailout

That's right way to go about finding this out!!

If we had the data on yearly breakdown of the costs these companies incur on each component of production, it would be very easy to see the difference. But part of it is also consumer perception and how they feel the products compare. i.e. If they are of same quality for the price demanded etc.

I have a feeling that US govt. should have first done a study before bailing them out. and depending on the result of the study, they should have decided , atleast they could have pretended so and prepared a false one!!

mayankpj

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments